29 June [BBC] Sri Lanka's army is to establish an ethnic Tamil regiment for the first time, the minister for national reconciliation has told the BBC.

Vinyagamoorthi Muralitharan, who defected from Tamil rebels to ally with the government, said the army chief told him of the plan a few days ago. He said that hundreds of cadres from his militia had already joined up.

Sri Lanka is expanding its army although it recently declared victory in its civil war with Tamil rebels. ...

Mr Muralitharan - better known as Col Karuna - was a senior commander in the LTTE before defecting from them in 2004. He subsequently formed a paramilitary group Tamileela Makkal Viduthalai Pulikal party (TMVP), which primarily operated in the east of the country. ...

He said that some of his former cadres might even be appointed as officers. ...

30 June [Hindu] COLOMBO: Sri Lanka and China on Monday signed an agreement on the second and third stages of the $891-million Norochcholai Coal Power 600 MW Project. ....

The Information Department said phase two and three of the Norochcholai project would be completed by 2013. The 300-MW first stage commenced in 2006 and is to be completed next year. The Chinese government facilitated long-term loans at a low interest rate for implementation of the project.

Power and Energy Minister John Senevirathna said the government was keen on importing sophisticated coal power infrastructure to minimise environmental hazards and that the project would be 98.8 per cent environmentally efficient, reducing the risk of pollution to mere 1.2%. ....

COLOMBO (Reuters) - Sri Lanka has granted China an exclusive economic zone in its first post-war effort to attract more investment from Asia's largest economy, the country's investment promotion agency said on Wednesday.

Hong Kong-based conglomerate Huichen Investment Holdings Ltd. will invest $28 million to develop the zone located in Mirigama, which is 55 km (34 miles) from the main port in the capital Colombo and 40 km from the international airport.

"The Chinese company will establish, develop, and market the new special economic zone," A.M.C. Kulasekera, BOI deputy director general, said in a statement.

China has long had ties with Sri Lanka and was a steadfast ally in the last stage of a 25-year war with the Tamil Tigers, using diplomatic heft at the United Nations to keep a Western-led move to impose a truce off the Security Council agenda.

It also sold weapons to the government as it built up its armed forces to defeat the separatist rebels.

China's deepening ties with Colombo have stoked concern in the island's giant neighbour India which fears it is part of Beijing's policy of strategic encirclement by building close relations with all its neighbours.

Sri Lanka declared total victory on May 18 in a war that has been a drag on its $40 billion economy for decades. It is expecting foreign direct investment this year to surpass the record $889 million seen in 2008.

Already, Chinese firms have built or are building similar turnkey investment zones in African countries, including Ethiopia and Zambia, to house manufacturing and other businesses, besides their mainstay mineral and resource extraction firms.

Huichen has interests in coal, metal and gem mining mostly in Mongolia and Africa, and also in manufacturing of agricultural machinery, buses, cars and motorcycles, according to its English-language web site.

It also sells finished gemstones, and is preparing to add Sri Lankan sapphire and opal to its offerings, the web site said.

Already, China's government and Chinese firms are taking part in two major projects, building the Hambantota port in southern Sri Lanka and the financing of a coal-fired electricity plant.

To build the second and third phases of the 900 megawatt coal-fired Norochcholai power plant, China offered an $891 million loan with a tenure of 20 years at 2 percent, state media reported this week.

Samarasinghe said a committee headed by the island's attorney general has been appointed to draft the plan.

"The committee is tasked to come out with the plan as soon as possible," Samarasinghe said.

Sri Lanka's recent human rights record was called into question during the final phase of the military conflict between the government troops and the Liberation Tigers of Tamil Eelam (LTTE) during which thousands of civilians were reportedly killed and more than 300,000 displaced. .....

Colombo, Jul 20 (PTI) In a humanitarian gesture to Tamils, Sri Lanka has said that child soldiers recruited by the LTTE would not be prosecuted, and instead made to go to schools.

The gesture was announced by the President Mahinda Rajapaksa who said: "our hearts are not vicious. We will not prosecute children who are 12, 13 and 14 years of age and were forced to take up arms."

"We need to integrate them into society after rehabilitation," he said.

The President pointed out that the LTTE denied education to young children in the North and East by recruiting them as combatants to fight a "useless" war.

Rajapaksa was speaking in the holy town of Mahiyangana in Badulla District in the Uva Province on Saturday and he recalled that when the children in the South studied, the LTTE made the young in the North carry T-56 weapons. ....

20 July [Express] COLOMBO: Strong support from India at the IMF board and the need to match China’s growing clout in the island nation have resulted in the US giving up its opposition to the international funding agency’s extending a $2.5 billion standby facility to Sri Lanka.

Sunday Island reported that IMF Executive Board would meet on July 24 to sanction the facility following the submission of a letter of intent by Sri Lanka agreeing to abide by certain conditions imposed by the funding agency.

On May 14, at the height of the war against the separatist Tamil Tigers, Secretary of State Hillary Clinton had said that it was not appropriate for the IMF to give a loan to Sri Lanka in the absence of a resolution of the conflict.

The US was leading a Western campaign to secure a ceasefire. ...

According to Sunday Island reason for the softening of the US attitude was Sri Lanka’s apparent willingness to carry out some structural reforms in its financial system and its impeccable record in loan repayment.

ROLE OF CHINA AND INDIA: However, some analysts feel that the US may be influenced by a Sino-Indian factor too. Sunday Island noted that the Indian member on the IMF board, who represents a group of countries including Sri Lanka, had been strongly advocating Sri Lanka’s case.

Then there is China’s increasing economic clout and a growing strategic interest in Sri Lanka, which has made Washington sit up. Like India, the US may be veering round to the view that the only way to prevent Sri Lanka from going wholly under Chinese influence is to meet Sri Lanka’s demands.

The paper pointed out that it was when the West was putting heavy pressure on Sri Lanka to give in to the LTTE’s demand for a ceasefire, that China signed an agreement to give Sri Lanka a $1.2 billion long term soft loan for a huge housing project. The Exim Bank of China issued a letter of interest in funding the Matara-Kataragama railway.

This railway would help build up the hinterland of the Chinese-built mega port at Humbantota in the deep south of the island.

July 24 (Bloomberg) -- The International Monetary Fund, which has mounted rescues from Iceland to Ukraine in the past year, approved a loan of about $2.5 billion to Sri Lanka, the country’s ambassador to the U.S. said in an interview.

The IMF earlier this week said it reached a staff-level agreement for a stand-by loan to help the island nation rebuild its economy after the end of a 26-year civil war and replenish its international reserves. The Washington-based lender’s executive board was scheduled to vote on the deal today.

“This money is mainly for reserves and balance-of- payments,” Jaliya Wickramasuriya, the country’s ambassador to the U.S., said in an interview in Washington today. “No one has opposed it” before the IMF’s executive board, he said.

IMF spokesman William Murray had no immediate comment on the loan.

Sri Lanka’s reserves more than halved in the six months that began in September to as little as $1.4 billion as the global recession hurt export earnings, prompting it to start talks with the IMF in March.

The IMF has said Sri Lanka’s government has undertaken a program aimed at rebuilding reserves, reducing the fiscal deficit, strengthening the financial sector and reconstructing areas damaged by the conflict.

Sri Lanka’s central bank this month raised its 2009 growth forecast for Sri Lanka to as much as 4.5 percent from an earlier estimate of 2.5 percent after the government in May defeated the Liberation Tigers of Tamil Eelam, a separatist group.

Sri Lanka aims to cut its budget deficit to 7 percent of gross domestic product in 2009, from 7.7 percent last year, central bank Governor Nivard Cabraal said in a July 21 interview.

Colombo, July 24 (PTI) India will help rebuild public and private infrastructure in war-ravaged Tamil-dominated northern Sri Lanka and has signed an agreement under which latest technology will be used for mass-scale construction there.

The pact will cover construction of buildings and utilities under the massive rehabilitation and reconstruction programme in the north, a statement by the Construction and Engineering Services Ministry of Sri Lanka said today.

The agreement between the Ministry's construction sector arm ICTAD and India's Construction Industry Development Council (a collaboration of government of India and the Indian construction industry) was signed in the presence of Construction Minister Rajitha Senaratne on Wednesday.

The Indian Council, a New Delhi-based national institute on building and construction, will assist in the local building and construction works.

Sri Lanka’s first ever chief of defence staff Sarath Fonseka’s first day at work on Wednesday could leave China and Pakistan frowning for two reasons.

India was getting ready to send 500 soldiers to Sri Lanka — its largest contingent since the Indian Peace Keeping Force (IPKF) in 1987 — to help de-mine north and north-east Lanka, Fonseka announced.

“India was sending 500 de-miners to clear areas formally under the control of LTTE in the north,” Fonseka said in an informal talk after taking charge as chief of defence staff.

He did not indicate when the Indian contingent would arrive.

What would add to their furrows was his second announcement that $ 200 million worth of ammunition to be bought from China and Pakistan was no longer required as the war against the LTTE was over.

Earlier this month, the Indian government had expressed willingness to help demining the heavily mined areas like Killinochchi and Mullaitivu which till few months ago were LTTE strongholds.

The Lankan military says that a retreating LTTE had installed thousands of anti-personnel mines to stall the advancing Lankan troops. A private Indian company is already helping in de-mining areas in the north.

July 24 (Bloomberg) -- The International Monetary Fund, which has mounted rescues from Iceland to Ukraine in the past year, approved a loan of about $2.5 billion to Sri Lanka, the country’s ambassador to the U.S. said in an interview. ...

25 July [Guardian] Britain made clear its discontent over Sri Lanka's treatment of Tamil refugees last night by abstaining from a vote at the International Monetary Fund to give $2.4bn (£1.46 bn) to the country.

The abstention, the first by the UK since 2004, signals the degree of unease in London over the handling of the humanitarian crisis in Sri Lanka following the government's recent victory in its civil war against the Tamil Tigers. The US, Germany and France also abstained. ....

Was Sri Lanka a British colony before it gained independence?

Apparently among the G8 countries, four of them abstained, all western.

7 Aug [CSMonitor] Selvarasa Pathmanathan led the remnants of the rebel organization that was militarily defeated by Sri Lanka three months ago.

Three months after Sri Lankan forces defeated the Separatist Tigers of Tamil Elam (LTTE) in their last stronghold, the government continues to break up the final remnants of the rebel group. On Thursday, government officials announced the arrest of Tiger leader Selvarasa Pathmanathan, who was hiding in an unknown location in South Asia. He's now been taken to the Sri Lankan capital city of Colombo for questioning.

Mr. Pathmanathan, also known as Kumaran Pathmanathan (KP), took control of the Tamil Tigers after its leader, Vellupillai Prabhakaran, and other senior members were killed during the group's final stand in May. Pathmanathan stands accused of smuggling arms to the Tamils, financing the organization, and conspiring in the assassination of several prominent leaders, including former Indian Prime Minister Rajiv Gandhi, reports The Hindustan Times.

The Sri Lankan government has heralded his arrest as the final death blow to the ailing Tamil Tiger organization, reports The Hindu. ....

News of the detention is of particular interest to Indian authorities, who hope he may provide information about militant activity in their own country. Pathmanathan, who was wanted by Interpol, told a Sri Lankan newspaper almost 20 years ago that his organization would begin targeting Indian leadership, six months before a suicide bomber killed Mr. Gandhi, reports The Economic Times.

So, questioning KP could yield enormously useful information to India since the pellets, explosives and the Singapore Fragmentation Grenade (SFG) used in the assassination [of Gandhi] reached the LTTE courtesy the arrested man though they were meant for the war in Sri Lanka and not for the Gandhi killing per se. ....

COLOMBO, Aug 9 (Reuters) - The political allies of the defeated Tamil Tiger rebels won the most seats at local elections in a northern town, while the ruling coalition sailed to victory at local and provincial polls, results showed on Sunday.

Saturday's polls, one each for local councillors in the northern towns of Jaffna and Vavuniya and one to elect councillors for the southern Uva Province, were the first since the government crushed the Tigers' 25-year insurrection in May.

President Mahinda Rajapaksa had pledged to give Sri Lanka's minority Tamils a greater political voice through elections, and the votes in Jaffna and Vavuniya were the first test of that.

Analysts and allies say he has been using the provincial elections to gauge his popularity before holding an early national poll to secure a second six-year term. He is expected to cruise to victory with popular support from the war victory.

Both Jaffna and Vavuniya were on the periphery of the area the Liberation Tigers of Tamil Eelam (LTTE) ruled as a de facto state for decades, and neither town had held an election in 11 years.

The polls in the north were held under heavy military security and foreign journalists were not allowed in. Opposition candidates complained they had to get permission to travel there while the ruling party's candidates could move freely.

In Vavuniya, site of a major military base, the Tamil National Alliance's Ilanghai Tamil Arasu Kachchi (ITAK) party won five of 11 seats on the municipal council, the government's Information Department said.

The Tamil National Alliance is a coalition of LTTE supporters.

A party of a former Tamil militant faction that opposed the LTTE won three seats, and Rajapaksa's ruling United People's Freedom Alliance (UPFA) won two. Turnout was 50 percent, election officials said.

In Jaffna, where turnout was 25 percent, the UPFA won 13 seats and ITAK took eight, results showed.

Voters had said the polls may have come too early, with about 250,000 Tamils who fled the final fighting between the government and the Tigers still languishing in refugee camps under military guard.

Rajapaksa has vowed to resettle 80 percent by year's end and let them vote in an election across the Northern Province, which the LTTE had largely controlled for decades as part of its plan to create a separate state for Tamils. ....

AFTER a resounding military victory over the Tamil Tigers, Mahinda Rajapaksa, Sri Lanka’s president, must have hoped for triumph in the first post-war polls in the scarred north. In the event, low turnout and the unexpected success of a pro-Tiger party jolted the government in the elections on August 8th to the Jaffna municipal and Vavuniya urban councils.

Turnout was 22% in Jaffna (of an unrealistically inflated register) and 52% in Vavuniya. The ruling coalition led by the United People’s Freedom Alliance (UPFA) won 13 out of 23 seats on the Jaffna council. But the pro-Tiger Tamil National Alliance (TNA) came second with eight. The UPFA was led by a government minister, Douglas Devananda, whose campaign was well financed.

In Vavuniya, where nearly 300,000 people displaced by the war still languish in government-run camps, the UPFA won just two of 11 seats. The TNA secured five, and will be able to run the council in coalition with the Sri Lanka Muslim Congress, which won one seat.

This is not the outcome the government foresaw when it rejected calls to postpone elections to allow the north time for physical and emotional recovery. The TNA used to be a proxy for the Tigers and took orders from its leader, Velupillai Prabhakaran, who was killed by the army in May. The party was widely thought defunct after the Tigers’ rout. Some see its strong performance as a sign of growing anger among northern Tamils at the government’s failure to normalise their lives after 30 years of conflict. Initial promises of a political package that would resolve longstanding grievances have fallen by the wayside, having been pushed aside until after a presidential election in 2010.

Somapala Gunadheera, a retired civil servant, said the elections show that the annihilation of the Tigers has not achieved the government’s main aim, the building of a united Sri Lanka .....